Congrats on those calls.
I "called" a good move up on MNTA in the near term but I'm always too scared to bet on options whenever I'm right. I usually am only brave enough to bet on them when I'm wrong. Oh well. MNTA is my 2nd largest stock position currently so it's an awesome day anyway.
And I think MNTA is a good long term investment.
I just don't think you can buy calls 5 weeks from now and count on making a profit. There isn't any likely event other than an earnings call, and earnings are well modeled with this company.
The stock has to go above 16.80 to make a profit buying 16.00 calls.
Biotechs like MNTA tend to have sudden gains based on approvals, analysts upgrades, etc. Many of these can be predicted, some of them can't. Before the recent approval, buying calls might have made sense, sooner or later the FDA was likely to approve.
So now owning stock and selling covered calls is a good strategy. If you can do that 6 times a year, even if eventually some event boosts the stock and you get called away, the money you make all other times made up for the one time you made money and got called away.
Basically MNTA is a boring stcck right now that makes money every month. It will get exciting again, maybe Dew can determine when, court trials or FDA actions?
I am of the mind that Teva will eventually get their approval, if it takes another 2 Qs, MNTA will have enough cash that 15.00 will likley hold even with that negative event.
Maybe there are better investments, but this is good, just stay long and check in once a month.
Momenta's book value at the end of 2010 was $4.17 per share, and in all likelihood will exceed $5 per share when Q1 earnings are announced. This is an extraordinary ratio of stock price to book value/cash for a biotech that has an approved product.
How do you know those aren't covered calls that were sold short for the prem?
Normally those who buy calls for profit don't buy so far out, they usually buy 1-2 days out of an exepected event.
I had to reply to this bits.. I don't understand the logic here.. IMO investors who like to gamble buy 1 to 2 days within expiration.. Investors who see growth in a company buy leaps. JMO I don't know any sound investor who buys options within days of expiration. Maybe i'm wrong
Huh? That makes no sense. I buy long term calls and LEAP calls all the time. The expected events here are the May 5th earnings call. If the street is expecting around $0.77 and MNTA delivers $0.90 or more and guides next quarter to be another $0.90 cents or more, then the shorts should get killed, and these calls will be deep in the money at expiration.
You could buy SEP 2011 calls to include the next two quarter earnings. Or you could buy LEAP 2012 or 2013 calls for the earnings, T-Enox rejection, M-Copaxone approval, FOB partnerships etc. etc. etc.